Sutcliffe v Tarr

JurisdictionNew Zealand
CourtCourt of Appeal
JudgeBrewer J
Judgment Date03 May 2018
Neutral Citation[2018] NZCA 135
Docket NumberCA208/2017
Date03 May 2018

[2018] NZCA 135

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

Court:

Asher, Brewer and Collins JJ

CA208/2017

Between
Douglas John Sutcliffe
First Appellant
Terence Sutcliffe and Braden Matson as Partners of Frost & Sutcliffe Lawyers
Second Appellants
and
Philip Claude Tarr
Respondent
Counsel:

P J L Hunt and J Heard for First and Second Appellants

R D Butler and L V F Ingram for Respondent

Civil Procedure, Estoppel, Law Practitioners — appeal against a decision of the High court (“HC”) which dismissed the appellants application for strike out — the respondent was claiming that the appellant had exerted undue influence on him to sign a blank share transfer and that the appellant had breached fiduciary duties owed as his solicitor by failing (in paraphrase) to act in best his interests — defence of laches — issue estoppel

It was an abuse of process to bring the same proceeding “in a different garb”. It was no bar that the later proceeding was brought against a different party. Claims may be struck out as an abuse of process even though the defendant was not party to the previous litigation.

The Court held that T's action against S was an abuse of process of the Court. The causes of action themselves, undue influence and breach of fiduciary duty were unrelated to the FC proceeding. For cause of action to be viable it must be possible to prove loss arising from proof of the cause of action. That would only be possible if the HC were to hear afresh the arguments T made to the FC and to the HC and reach different conclusions. It had been held against T that he never had a beneficial interest in the shares. There was no signing of a blank transfer. T might be able to establish undue influence by S or a breach of fiduciary duty but that meant nothing unless he could prove loss and to prove loss he would have to persuade the Court that he had a beneficial interest in the shares.

In order to establish the loss of a chance T would have to prove that the company was a joint venture or that the shares were to be held in a family trust which would require attacking factual findings which had already been determined in the earlier proceedings. The appeal was allowed on that ground.

The defence of laches was inappropriate for summary judgment.

In order for S to claim issue estoppel, he must be a privy of Mrs T. S and Mrs T did not have a mutuality of interest. S was merely a lawyer acting on her behalf. That was insufficient to establish that he was her privy for the purposes of issue estoppel.

The appeal was allowed. The proceeding was an abuse of the process and was struck out.

  • A The appeal is allowed.

  • B The respondent's proceeding against the first appellant is an abuse of the process of the Court. It is struck out. C The respondent must pay the appellants one set of costs for a standard appeal on a band A basis and usual disbursements.

JUDGMENT OF THE COURT
REASONS OF THE COURT

(Given by Brewer J)

Introduction
1

Mr Tarr is suing Mr Sutcliffe. 1 His action relates to a property purchase which took place in 1996. Mrs Tarr, at that time Mr Tarr's estranged wife, was also involved. Mr Sutcliffe, a solicitor, acted on the purchase of the property, which was bought in the name of a company incorporated for the purpose, Great Empire Ltd (GEL). Mr and Mrs Tarr were the shareholders.

2

Mr Tarr claims:

  • (a) Mr Sutcliffe exerted undue influence on Mr Tarr in breach of a solicitor/client relationship to persuade Mr Tarr to sign a blank share transfer by use of which Mrs Tarr later deprived Mr Tarr of the benefit of his shareholding in GEL.

  • (b) Mr Sutcliffe breached fiduciary duties owed to Mr Tarr as his solicitor by failing (in paraphrase) to act in Mr Tarr's best interests, the result of which was Mr Tarr's loss of the benefit of his shareholding in GEL.

3

Mr Sutcliffe applied to the High Court for summary judgment against Mr Tarr, or for strike-out of the causes of action against him. His application was heard by Associate Judge Christiansen on 20 March 2017. Mr Sutcliffe argued:

  • (a) the defence of laches applies as the alleged acts/omissions took place 20 years prior to the bringing of proceedings and Mr Sutcliffe cannot recall the events and has no records relating to them; and

  • (b) the claim is an abuse of process, or is barred by issue estoppel, because the Family Court and the High Court have already determined that Mr Tarr held the shares on trust for Mrs Tarr, and rejected the factual assertions Mr Tarr relies on for this new action.

4

Associate Judge Christiansen dismissed Mr Sutcliffe's application. 2 He now appeals the dismissal.

Background
5

Mr Tarr first brought the issue of ownership of the shares to the courts when he filed relationship property proceedings against Mrs Tarr in the Family Court in April 2007, some 14 years after he and Mrs Tarr separated. Judge de Jong held: 3

[28] This Court is satisfied on the balance of probabilities that 500 GEL shares issued in the husband's name were held by him by way of express trust for the benefit of the wife. In summary, the reasons for reaching this conclusion are is [sic] follows:

  • (a) The uncontested evidence is that it was the wife's idea to purchase the GEL property. The only way the bank would grant an application for 100% finance needed to purchase this property was to involve the husband. For that reason the wife arranged to incorporate GEL and distribute an equal number of shares to each party.

  • (b) The wife contemporaneously arranged for a share transfer form to be prepared by the conveyancing lawyers handling the finance and purchase arrangements. This share transfer form is more likely than not to have been prepared by the lawyers because of the language used in the document e.g. “pursuant to Declaration of Trust.”

  • (c) The share transfer form was signed by both parties. The husband signed as the “transferor” and the wife signed as the “transferee.” Their signatures were witnessed.

  • (d) The husband believes the share transfer form was not filled out before it was signed but this Court does not accept that. His suggestion the wife later filled out the form is rejected by the wife and not accepted by this Court. The language used in the form is legal terminology. The parties signed the share transfer form at the same time before a professional witness. The husband would have known he was signing the form as transferor and that the wife was signing as transferee of the same bundle of shares.

  • (e) While the husband suggests the share transfer form was signed as “part of some pre-nup/contracting out documents” there is no evidence of other documents being prepared or signed. Even if other documents had been prepared and signed, that does not explain why the shares were being transferred to the wife. Finally, if pre-nuptial or contracting documents had been signed, it is more likely than not that at least one copy of the signed documents would have been retained by the law firm in their deeds safe, or possibly a record kept of where the documents had been sent to.

  • (f) Although the husband suggests the GEL venture was a joint enterprise, and consistent with a joint Kawau Island inquiry, this Court is not satisfied this was a joint enterprise or that there was a joint Kawau Island inquiry. This Court accepts the wife's evidence that she went to Kawau Island with the parties' daughter believing the trip to be a family outing.

  • (g) The husband produced a letter at hearing sent 10 years after separation, from his wife's then lawyer, as evidence that the wife has accepted the GEL shares are relationship property. There are two reasons why this Court attaches little weight to this letter. The first is that the wife's evidence is she did not see the letter before it was sent to the husband. Otherwise she says she would have discussed a change to how the GEL shares were referred to. The second reason is that the letter is very general in nature. It does not contain any proposals. Although the letter makes reference to the parties holding an equal number of GEL shares it does not make specific reference to the PRA status of those shares nor does it address any other significant issues such as post separation contributions and loans.

(Footnotes omitted.)

6

Mr Tarr then appealed Judge de Jong's decision to the High Court. The appeal was dismissed by Thomas J on 26 June 2014. 4

7

Thomas J considered the merits of the case afresh in accordance with the approach directed by the Supreme Court in Austin, Nichols & Co Inc v Stichting Lodestar, 5 and bearing in mind that, pursuant to the interaction of s 39 of the Property (Relationships) Act 1976 and s 75 of the District Courts Act 1947, the appeal was by way of rehearing. 6

8

Having summarised and considered the respective submissions on behalf of Mr Tarr and Mrs Tarr, Thomas J concluded:

[31] There are two main points relied on by the appellant in connection with GEL. The first is that there was no declaration of trust. However, even though it is referred to in the share transfer, the declaration does not have to be a written document.

[32] The second point relied on is the letter from Mrs Tarr's then solicitor. I accept Mrs Tarr's evidence that she did not review the letter before it was sent. Furthermore the letter was written in the context of a preliminary approach to commence discussions about relationship property. The interpretation placed on paragraph 5 of the letter is not the only possible

interpretation. Paragraph 5 is somewhat equivocal. It accurately records the position as to ownership of the properties. I agree with the appellant that there would be an assumption on reading paragraph 5 that property owned by GEL was relationship property. However, in the context of the circumstances in which the letter was written, there was no need for specificity.

[33] The weight of the evidence on...

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1 cases
  • Parkhurst v Bisht
    • New Zealand
    • High Court
    • 29 October 2021
    ...39 At [37]. 40 At [34]. 41 At [88]–[97] and [103]–[111]. 42 Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 368 as cited in Sutcliffe v Tarr (No 2) [2018] NZCA 135, [2018] NZAR 696 at 43 Powerbeat, above n 21, at [199]. 44 See, for example, the identification of contingencies in McLe......

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